ASEAN Entrepreneurship Journal (AEJ) | Vol 8 No 1, 21-28, 2022 | e-ISSN: 2637-0301
ASEAN Entrepreneurship Journal (AEJ)
Factors Leading Customers to Shop at On-Campus Convenience Store
Siti Zaleha Sahak1*, Eylia Nadiah Drahman2, Nur Izdzah Nadzara3, Siti Nur Ayuni Alwi4
1Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia.
2 Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia.
3 Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia.
4 Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia.
* Corresponding Author
Abstract ARTICLE INFORMATION
The Covid-19 pandemic has transformed the retail landscape in several ways.
Online shopping particularly, has become a more dominant retail platform. This study focused on one of the brick-and-mortar retailers of convenience store segment.
The segment is also known as c-store. The primary data was collected in the year 2019 before the pandemic. The study aimed to examine the factors that lead customers to shop at the on-campus c-store located in one of the public universities in Selangor, Malaysia. The factors examined were store convenience, sales assistance, store atmosphere, store attractiveness, store pricing policy and store promotion. A survey form was distributed face to face to the c-store’s customers, and the total usable responses obtained was 123. The results of the multiple regression analysis showed that sales assistance and store atmosphere significantly influenced the respondents to shop at the store. The findings of the study offer some inputs to the c- store operators in designing effective marketing strategies, which tend to be more challenging due to the Covid-19 pandemic.
Received: 21 Dece 2021 Revised: 17 Jan 2022 Accepted: 07 Feb 2022 Published 30 April 2022
Keywords: Actual purchase, Convenience store, On-campus 1.0 INTRODUCTION
According to Mordor Intelligence Report (2018), the global retail industry was valued at USD 23,460 billion in 2017 and is expected to reach USD 31,880.8 billion by 2023. Based on the report, consumer spending, which typically accounts for around two-thirds of the GDP, is regarded as the critical indicator of the retail market's health. Besides, the increasing strength of online shopping has been a significant driver to retail growth.
In Malaysia, retail trade sales recorded 6.7%
(RM2.9 billion) growth in January 2020 from January 2019 (Department of Statistics Malaysia, 2020). The total sale was contributed by various retail categories, including hypermarket, supermarket, departmental store, online retail, convenience store, and specialized store.
For the convenience store (c-store) category, Malaysia's major market players are 7-Eleven, 99SpeedMart, Family Mart, MyNews, Petronas Mesra, Shell Select, and Petron. 7-Eleven is one of the top 10 major retail players in Malaysia. It represents the only operator for the convenience store category (Mordor Intelligence, 2020).
7-Eleven has operated in Malaysia since 1984, and as of February 2020, it has 2417 stores nationwide (7eleven Malaysia, 2020).
The future landscape of c-store segment is seen as competitive, as many other retailers may expand their business into this category. As quoted in the Euromonitor Report (2018), "Due to time-pressed lifestyles, the need for convenience amongst consumers is becoming increasingly important. Retailers in all channels are deploying tactics to get consumers what they require as conveniently as possible".
C-stores constitute a successful format in developed markets such as the U.S., Canada, Europe, and Japan (Pandey and Srivastava, 2016). C-store is commonly a relatively small store near residential areas, open extended hours seven days a week, and carries a limited line of high-turnover convenience products at slightly higher prices (Kotler and Armstrong, 2014, p.398). Previously, every convenience store looked about the same. However, nowadays, companies in the industry are approaching markets with different types of
stores and diverse product offerings (National Association of Convenience Stores USA, 2020).
This present study focused on one of the c-store players in Malaysia, which has an on-campus outlet. The on-campus outlet is located at the university's shoplot near the central campus parking, the female students' hostel, and a few buildings. The campus has about 10,000 students and staff, and it is the center for most postgraduate degree programs. Some students resided outside the campus. The on-campus c-store commenced its operation in 2018, and its daily operating hours are from 7 a.m. to 11 p.m. However, the sales recorded were considered low.
Understanding customer purchase behaviour is vital for any business entity (Pandey and Srivastava, 2016). Specifically, the need to identify the segmentation and marketing mix strategies is critical to retailers to enhance customers’ shopping experience and keep the business in the competitive retail industry (Ing. et al., 2020). The needs are more demanding for the on-campus retail outlet because the sales generated are highly dependent on the specific (limited) target market, i.e., university students and staff. Its cached location is very much like the c-store that operates in a typical residential area. The place presents both an opportunity and some drawbacks. Wood and Browne (2007) argued that one of its weaknesses is having a limited number of customers.
However, it may have a chance to maximize sales.
This study aimed to examine the factors that influence the customers to shop at the on-campus c-store.
The factors discussed were store convenience, sales assistance, store atmosphere, store attractiveness, store pricing policy, and store promotion. Managerially, the study findings may provide some insights into improving the outlet's sales, which are becoming more challenging due to the Covid-19 pandemic.
2.0 REVIEW OF LITERATURE AND HYPOTHESES DEVELOPMENT
The buyer decision process consists of five stages: need recognition, information stage, evaluation of alternatives, purchase decision, and post-purchase behaviour (Kotler and Armstrong, 2014). Purchase decision refers to a process where consumers decide to buy the most preferred brand. In the context of retail, this stage may refer to consumers’ decision on where to shop.
A purchase decision that is also known as the actual purchase is vital as purchase intention is predictive. The intention to buy may change due to two factors: attitudes
of others and unexpected situations (Kotler and Armstrong, 2014).
Previous researchers had identified few factors that influence customer patronage and loyalty to c-stores.
The factors include functional proximity (convenience and shopping efficiency), relational proximity (satisfaction with the store employees' services and community link), time-saving (Gahinet and Cliquet, 2018), store location (Mengyao, 2018; Pandey and Srivastava, 2016; Wood and Browne, 2007), product pricing and promotion (Andreti et al., 2013).
For the on-campus c-store, the factors examined in the past studies include the product price, consumers' attitudes, habits, and loyalty (Chaudhury, 1995), and food quality (Horacek et al., 2013).
Different theories have been used in different contexts of retail studies. For instance, a theory of stimulus-organism response (S-O-R) (Mehrabian and Russell, 1974) underpinned the studies on the influence of retail store atmospheric on customers’ shopping behaviour (Turley and Milliman, 2000). A study by Husnain et al. (2019) on impulse-purchase in the retail sector employed a theory of retail revolution (Roth &
Klein, 1993). Sari et al. (2017) used a general theory of customer patronage in examining customer patronage of hybrid retail, a combination of a petrol station and convenience retail structure, while in a study of the on- campus retail in a state university in the Northeastern US (Chaudhuri, 1995), the theories of brand equity (Aaker, 1991) and double jeopardy (Ehrenberg et al., 1990) were employed.
The present study is carried out as applied business research. The consumer buying decision model (Kotler & Armstrong, 2014) guides the development of the research framework.
According to The Edge Malaysia (2019), "As society becomes more urbanized, it is undeniable that convenience for consumers has become a highly valuable commodity. Changing consumption habits explain the proliferation of convenience stores in the country in recent years, especially in the Klang Valley".
There are many definitions of "convenience." In a retail context, it first goes to the location of the store.
Unlike retail businesses such as food truck, which is 'mobile' in finding a convenient and strategic site (Sulaiman et al., 2021), selecting a location is more challenging and costly to c-store. In fact, according to the retail analysts, for a c-store, having the right location is far important than the number of stores a chain has. The right place includes the store’s distance from other stores (not too near to each other) and located at or near the public transport station (The Edge Malaysia, 2019).
Wood and Browne (2007) highlighted four critical factors in making convenience store sites viable.
They are pedestrian footfall, the degree of available car parking; store visibility; and the store design. They added that a 'field visit' to the store site is essential, given these critical factors. It provides valuable inputs to the store chain in making investment and business expansion decisions. Besides a convenient location, other convenience incentives offered by retailers, such as longer operating hours or ample parking, can draw patrons to a store (Pandey and Srivastava, 2016).
Therefore, the following hypothesis is proposed:
H1: Store convenience will positively and significantly influence the customers to shop at the on- campus c-store
In a broader perspective, the employee characteristics and employee uniforms are essential dimensions of human variables in the retail environment (Turley and Chebat, 2002). The past studies showed that store sales assistants' quality significantly influences customers' purchase decisions (Gahinet and Cliquet, 2018; Sehgal and Khanna, 2017; Andreti et al., 2013).
Andreti et al. (2013) indicated that the employees' service quality was among the key factors that drive consumers to shop at c-stores in Indonesia. The employees' dimensions measured include their friendliness, quick serviceability, and understanding of customers' needs.
Hence, it is postulated that:
H2: Store sales assistant will positively and significantly influence the customers to shop at the on- campus c-store
The store atmosphere, which also refers to the store environment, plays a vital role in its success (Turley and Chebat, 2002; Turley and Milliman, 2000). It includes the aspects of colours, layout, music, flooring, lighting, and merchandise arrangements. A good store atmosphere design can create a unique shopping experience, and there was a strong link between atmosphere and sales (Turley and Chebat, 2002). The store atmosphere significantly influences store image (Hanaysha, 2020) and consumers’ purchase decisions (Hanaysha, 2018). Thus, the quality of the store design requires consideration even at the early stage. A good store design provides customers' ability to circulate throughout the store, including space to queue at peak times. In a case where the store is already constructed, the retailer should face the challenge of making the 'ready' store "workable" (Wood and Browne, 2007).
Thus, the hypothesis is:
H3: Store atmosphere will positively and significantly influence the customers to shop at the on- campus c-store
The consumer buying decision is also influenced by the store's attractiveness (Sehgal and Khanna, 2017).
The store attractiveness key dimensions include the product availability, brand variety, in-store display, store's entrance and exit, and the overall environment of the store's interior and exterior design (Sehgal and Khanna, 2017). The hypothesis is:
H4: Store attractiveness will positively and significantly influence the customers to shop at the on- campus c-store
Generally, the prices of most c-store products are slightly higher than in other retail stores due to its higher operating cost. Most c-stores open 24 hours, seven days.
The typical retail store pricing policy includes the discount offers and gift vouchers, and returns/exchange policy (Sehgal and Khanna, 2017). In a C-store (7 Eleven) study in the Taiwan market, Li et al.'s (2012) work documented a significant positive influence of store price on the customers purchase intention. Hence, it is hypothesized that:
H5: Store pricing policy will positively and significantly influence the customers to shop at the on- campus c-store
Store promotion includes in-store demonstration, display, and loyalty programs (Kotler and Armstrong, 2014). In a study of c-stores in one of the cities in Indonesia, Andreti et al. (2013) found that promotion significantly influenced the respondents' buying decisions at the c-store. In their study, the store promotion measurements include the attractiveness of the promotion, seasonal promotion, and coupon offered. It is hence, predicted that:
H6: Store promotion will positively and significantly influence the customers to shop at the on- campus c-store. Figure 1 presents the research framework of the study.
Figure 1: Research Framework 3.0 RESEARCH METHODOLOGY
The primary data of the study was obtained using a survey method. The measurement items of each variable were adopted from Sehgal's (2017) and Hanaysha's (2018) studies. Store convenience was
measured by 6 items. The items include
‘Merchandise can be found easily in the outlet’ and
‘The outlet has accessible parking space’. Sales assistance was measured by 5 items. It includes ‘The staff are efficient in responding to customer’s request’.
Store atmosphere has 6 items such as ‘The outlet has soothing ambiance’. Next, store attractiveness used 7 items indications. One of the items is ‘The outlet has attractive in-store displays’. Store pricing policy has 3 items measurement which include ‘The price of the products at the outlet are fair’ and store promotion utilized 5 items indicators which include ‘The outlet provides attractive customer loyalty card’. Customer purchase decision was measured by 5 statements and it includes ‘I feel good about my decision to purchase products from the outlet’. All items were measured using a 5-point Likert Scale (1 = Strongly Disagree to 5
= Strongly Agree).
Before the fieldwork, the survey instrument was pre-tested by an academic researcher and the outlet's area manager.
The unit of analysis of the study was the individual customer of the on-campus outlet. The survey was run in October 2019 for two weeks, and the study utilized a convenience sampling technique. With the permission from the outlet management, the questionnaire was distributed face-to-face to the customers at the outlet.
The total responses received was 123, and all were usable. The data were analyzed using the SPSS software (Version 22).
Overall, the reliability of the items for each construct was considered as good, in which the Cronbach alpha value ranged from .703 to .863, except for pricing policy (.574). It could be because, price element tends to be subjectively perceived by consumers (Ing et al., 2020).
4.0 ANALYSIS AND FINDINGS
Table 1 highlights the respondents' demographic profiles. A majority of the respondents (64.2%) were female. Nearly half of the respondents (49.6%) aged 18 to 21 years, and 43.9% aged 22 to 25 years. A vast majority of the respondents were students (92.9%), and most respondents were single (95.9%). 51.2% of the respondents who were students were staying in the university accommodation.
Table 1: Respondents' Profiles
Respondents’ n = 123 %
Gender Male
Female 44
79 35.8
64.2 Age 18 – 21 years old
22 – 25 years old 26 – 29 years old 30 years old and above
61 54 5 3
49.6 43.9 4.1 Marital Status 2.4
Single
Married 118
5 95.9
4.1 Occupation
Student
Non-Student 114
9 92.7
Residentiary (Student) 7.3 Resident
Non-Resident 63
60 51.2
48.8 Education
SPM Diploma
Bachelor's Degree Master Degree Doctoral Degree Others
4 23 60 12 0 24
3.3 18.7 48.8 9.8 0.0 19.5 Visit Time
Morning Afternoon Evening
34 66 23
27.6 53.7 18.7 Mode of Payment
Cash
Debit Card / Paywave QR Code
114 8 1
92.7 6.5 0.8 Sales Assistance
Store Atmosphere Store Convenience
Customer Purchase Decision Store Attractiveness
Store Pricing Policy
Store Promotion
Many of the respondents shopped at the on- campus c-store once a month (48.8%), and the average total spending was less than RM10 (84.6%). They preferred to shop at the store in the afternoon (53.7%), and a clear majority of the respondents (92.7%) used cash for payment. Based on an open-ended question (optional), 45.8% (22) of the respondents expected the store to offer various food and drink from familiar brands such as Gardenia for bread. Apart from that, 25% (12) suggested that the store sells more stationery items. Figure 2 highlights the summary of the respondents' shopping characteristics and preferences.
Figure 2: The respondents' shopping characteristics and preferences
The descriptive analysis shows that the store atmosphere recorded the highest mean score (m=4.10), and sales promotion recorded the lowest mean score (m=3.16). Multiple regression analysis was run to examine the factors leading to respondents' purchase decision. Based on the results of the analysis (Table 2), there were two significant factors namely, store atmosphere (β = .241, p < 0.05) and sales assistant (β = .238, p < 0.01). Thus, the results provided support for H2 and H3. The results show that although the outlet is a c-store, the store convenience was insignificant in influencing the respondents' decision to shop at the store (β = .177, p > 0.05). It means that H1 was not supported. The results of the study also show that H4, H5 and H6 were not supported.
Table 2: Regression analysis results Model Summary
Model R R
Square Adjusted
R Square Std. Error of the Estimate
1 .699a .489 .462 2.07463
a.Predictors: (Constant), Store Promotion, Store Atmosphere, Store Assistant, Store Pricing Policy, Store Attractiveness, Store Convenient
Coefficientsa
Model
Unstandardized
Coefficients Standardized Coefficients
t Sig.
B Std.
Error Beta
1 (Constant) 1.005 1.753 .573 .568 Store
Assistance .228 .083 .238 2.760 .007 Store
Atmosphere .214 .089 .241 2.394 .018 Store
Attractiveness -.001 .072 -.002 -.017 .987 Store
Convenient .160 .102 .177 1.564 .121 Store Pricing
Policy .251 .157 .152 1.596 .113 Store
Promotion .127 .084 .131 1.503 .136
a. Dependent Variable: Customers' purchase decision
5.0 DISCUSSION AND CONCLUSION
The retail industry in Malaysia comprises various settings. It causes the competition to become more intense, forcing the retail players to develop a new strategy to keep its relevance. For instance, to improve sales and profits, convenience stores have offered new products, such as ready-to-eat food (Statista.com, 2017).
As compared to other retail store locations, an outlet located in a designated area possesses strengths and weaknesses. This study was carried out to examine the factors that influence customers to shop at the on- campus c-store in one of the public universities in Selangor.
The result showed that the two significant variables that contributed to sales were store atmosphere and sales assistants. According to Hanaysha (2018), the atmospheric environment in a store, such as an ambiance, colour, sound, scent, layout, and space, provides essential clues to retail customers.
The present study's findings indicated that the respondents rated high for the outlet’s cleanliness and soothing ambiance.
The sales assistants' roles are also crucial. The indicators of sales assistants' service quality measured in the present study included their personalities, product knowledge, and willingness to help customers.
However, the study's findings should be interpreted in caution, as the survey was conducted before the Covid- 19 pandemic. Following the pandemic, perhaps the outlet should consider installing digital equipment to provide product checking and product information to consumers. It may help to reduce interaction between consumers and the outlet staff. On top of that, the process of buying and selling can be enhanced by integrating mobile application via QR Code. The review function of the app would enable customers to write their shopping experience. The feedback may offer inputs to the business operators in improving their services and sales (Zambri et al., 2021).
Other variables examined in this study were found as insignificant. They were store attractiveness, store convenience, pricing policy, and store promotion.
Notably, although the outlet examined is a c-store, the store convenience did not influence respondents to shop at the outlet.
The low mean score of the items measuring 'store convenience' indicated that most respondents disagree that the store is convenient. Many of them stated that the store location was not easy to access.
The survey found that nearly half (48.8%) of the respondents shopped at the store only once a month.
The average spending per customer per visit was also relatively low, which was below RM10. The findings imply the importance of functional proximity. Despite its small size, the store should offer more product assortment, a clear and functional layout and fast check out to encourage more customers to frequently shop at the store (Gahinet and Cliquet, 2018).
Generally, c-stores should be located in urban areas and close to busy roads, public transports, and pedestrians. Convenience also means that the stores are situated close to home shopping locations and available to busy consumers, and offer low-priced products (Li et al., 2012).
Also, to mitigate the location constraint, the c- store manager may consider collaborating with other business partners such as e-commerce businesses to offer students and the on-campus community services needed. The services offered may help to create an 'invitation to visit.' For instance, according to The Edge (2019), the c-stores chains like 7-Eleven and MyNews are tying up with e-commerce logistics partners to provide last-mile service to customers. This service will inevitably cause a spillover effect on business at the convenience store.
As an on-campus c-store, the main target customers are students. According to Li et al. (2012), most of c-store consumers are price-sensitive and they tend to expect a high-level product assortment. Thus, the c-store must increase its customer loyalty to increase sales by offering more price deals and product variety (Gahinet and Cliquet, 2018). Ing et al.’s (2020) study on grocery retailers in Malaysia reported that c- store retailers used to constantly conduct a market survey on product pricing. It is to help them keep their products at a 'reasonable price.'
In Japan, a c-store like 7-Eleven with a floor area of only about 100 square meters offers more than 3,000 kinds of goods and services. Fresh foods and beverages account for about 70% of the products (Mengyao, 2018). The same goes for the food truck business, where product variety is significant in attracting customers, followed by food pricing (Sulaiman et al., 2021). Not only that, the on-campus c- store should offer quality food to promote a healthy diet among students (Horacek et al., 2013).
There are some limitations of the study. This includes the sampling technique used, i.e., convenience sampling. Thus, the study results should not be generalized, even to other locations of the outlets of the same retail chain. The total responses of 123 were also considered as small. However, the total is within the expectation as the respondents were the actual customers of the outlet, and the survey's participation was voluntary.
Future studies may focus on developing possible strategies for the on-campus c-store in dealing with the post-Covid-19 pandemic. It includes examining the use of artificial intelligence (AI) in-store.
As per Low and Lee's (2021) work, the Customer's Application and the Smart Shelf are among the AI systems that can be employed. The first will allow customers to save queuing time, and the latter system will help the retailer manage inventory. As stated, contactless convenience stores with AI systems may promote a safe and secure shopping experience.
Author Contributions: “Conceptualization, S.Z. Sahak, E.N.
Drahman , N. I. Nadzara and S. N. A. Alwi ; methodology, S.Z. Sahak, E.N. Drahman , N. I. Nadzara and S. N. A. Alwi.;
software, E.N. Drahman and N. I. Nadzara.; validation, S.Z.
Sahak; formal analysis, E.N. Drahman , N. I. Nadzara and S.
N. A. Alwi; investigation, E.N. Drahman , N. I. Nadzara and S.
N. A. Alwi.; resources, E.N. Drahman and S.Z. Sahak; data curation, E.N. Drahman , N. I. Nadzara and S. N. A. Alwi;
writing—original draft preparation, S.Z. Sahak, E.N. Drahman , N. I. Nadzara and S. N. A. Alwi.; writing—review and editing, S.Z. Sahak.; visualization, S.Z. Sahak, E.N. Drahman , N. I. Nadzara and S. N. A. Alwi; supervision, S.Z. Sahak;
project administration, E.N. Drahman and S. Z. Sahak. All authors have read and agreed to the published version of the manuscript.”
Funding: “This research received no external funding”
Acknowledgments: The authors would like to thanks the sales team of on-campus convenience store for their support on data collection process. The support enables the authors to approach and distribute the questionnaire to the respondents at the store.
Conflicts of Interest: “The authors declare no conflict of interest.”
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